What it is
A cap on how concentrated your profit may be. Typically:
best day profit ÷ total profit ≤ threshold
with the threshold commonly between 20% and 50% depending on firm. Some apply it per trade rather than per day; some apply both.
Why it exists
From the firm's side the reasoning is sound. A trader who makes their entire month on one position has not demonstrated a repeatable method — they have demonstrated one outcome. The rule filters for process rather than for a lucky sequence, and it also discourages the strategy of taking one enormous gamble on a funded account precisely because the downside belongs to someone else.
The trap: the denominator moves
The part that catches people is that the rule is measured against your own total profit, not against your risk or account size.
Two consequences follow, and both feel unfair the first time:
A weak month makes the rule stricter. Make $10,000 with a best day of $3,000 and you are at 30%. Make $4,000 with the same $3,000 day and you are at 75% — the same trading, a much worse ratio, because the rest of the month was quiet.
Cutting losses well can breach it. A month where you avoided damage and had one strong day looks, to this rule, exactly like recklessness.
What it means in practice
The rule effectively sets a maximum useful size for a single good day. If your threshold is 30%, a $3,000 day requires at least $10,000 of total profit before it can be withdrawn — so an exceptional day early in a cycle commits you to grinding out the remainder rather than protecting it.
The behaviour it rewards is a flat distribution of profit across many days, which is a real skill and also a different one from making money. It is worth knowing which you are being paid for before the payout request, not after.
Checking your own concentration
The arithmetic needs only your daily results, which any export contains. The overtrading analyzer groups your history into trading days and shows the result of each, including your best and busiest — enough to see where your own profit is concentrated before a firm's rule tells you.
The dated-fact caveat
Thresholds vary by firm and by account type, and they change. Any specific percentage quoted anywhere — including any table we might publish — is only as good as the date attached to it, which is why this page describes the mechanism rather than listing firms.